America's largest low-wage employers spent $644 billion boosting executive pay while workers faced inflation
Stock buybacks at firms like Starbucks and Lowe's systematically transfer resources from employees to executives, revealing how regulatory changes since 1982 reshaped corporate priorities
The barista making your morning coffee earns $14,674 a year. Her new boss made $95.8 million in four months.
This isn't hyperbole—it's the stark arithmetic of modern American capitalism, crystallised in September 2024 when Starbucks awarded incoming CEO Brian Niccol nearly $100 million whilst workers across the country struck for better wages. Niccol's compensation created the widest executive-to-worker pay gap amongst America's largest corporations: 6,666 to 1.
Yet Starbucks isn't an outlier. It exemplifies a systematic transformation that has redirected corporate resources from workers to executives on an unprecedented scale. The 100 S&P 500 companies with the lowest median worker pay spent $644 billion on stock buybacks between 2019 and 2024—money that artificially inflated share prices and executive compensation whilst workers struggled with inflation and stagnant wages.
The numbers reveal the trade-offs starkly. Lowe's spent $46.6 billion on buybacks whilst half its workers earn under $33,000. That buyback spending could have given each of the retailer's 273,000 employees annual bonuses of $28,456 for six years. Instead, CEO Marvin Ellison collected $20.2 million whilst the company laid off workers without severance.
This isn't market failure—it's market design. These wealth transfers stem from specific regulatory changes that transformed American corporate behaviour, creating a machine that systematically funnels resources upward whilst leaving workers behind.
How Reagan-era deregulation unleashed executive enrichment
Until 1982, corporate stock buybacks were effectively illegal. Securities law treated companies purchasing their own shares as market manipulation—a reasonable position, given that buybacks artificially inflate stock prices by reducing share supply.
Everything changed when Ronald Reagan's Securities and Exchange Commission adopted Rule 10b-18. Led by Chairman John Shad, a former Wall Street executive, the SEC created a "safe harbour" protecting companies from manipulation charges if they followed basic guidelines. Suddenly, what had been prohibited became routine corporate practice.
The transformation was immediate and staggering. Stock buybacks have increased 40,000% since 1982. CEO-to-worker pay ratios exploded from 50-to-1 to today's 285-to-1. The correlation isn't coincidental: stock-based compensation now comprises 80% of executive pay, creating powerful incentives for corporate leaders to boost share prices through buybacks rather than invest in workers or productive capabilities.
The mechanism is elegantly simple and profoundly destructive. Companies repurchase their own shares, reducing the number outstanding and artificially boosting earnings per share. Stock prices rise. Executives whose compensation depends on share performance get richer. Shareholders enjoy temporary gains. Workers see resources that could have supported wage increases redirected toward financial engineering.
Corporate titans choose shareholders over workers
The human cost becomes visceral when you examine individual companies. Patricia Wilkerson, 59, worked for Lowe's in Dayton, Texas, until the company eliminated her position without notice or severance. She fell behind on mortgage payments whilst Lowe's allocated billions to buybacks—money that could have secured her job and supported thousands like her.
Lowe's spending priorities tell the story clearly. The company devoted nearly five times more cash to buybacks than to store improvements and technology upgrades. When executives had to choose between investing in workers and facilities or boosting share prices, they chose share prices. Ellison's 659-to-1 pay ratio reflects these priorities perfectly.
Starbucks presents an even starker example. Niccol's compensation package consisted almost entirely of stock awards—94% of his total pay. This structure creates direct incentives to prioritise share price appreciation over everything else, including worker welfare. The timing proved particularly cruel: as employees organised for basic economic security, resources flowed toward executive compensation whilst median worker pay remained below the federal poverty line for a family of two.
The broader pattern is systematic. Among the Low-Wage 100 companies, 56 spent more on stock buybacks than on capital expenditures. These aren't struggling firms making desperate choices—they're profitable corporations deliberately choosing financial engineering over productive investment.
The buyback machine undermines long-term prosperity
This represents a fundamental shift in how American capitalism operates. Research by economist William Lazonick shows that from 2003 through 2012, S&P 500 companies used 54% of their earnings for buybacks and another 37% for dividends. That left just 9% for everything else: research and development, worker training, equipment upgrades, expansion.
The retirement security numbers are even more damning. The 20 largest low-wage employers spent nine times more on stock buybacks than on worker retirement contributions. Chipotle exemplifies this skewed allocation: $2 billion on buybacks versus $42 million on employee retirement—a 48-to-1 ratio. With median pay of $16,595, 92% of eligible Chipotle workers have zero balances in their 401(k) accounts. They can't afford to contribute to retirement plans whilst the company spends billions inflating executive compensation.
These aren't abstract policy debates—they're concrete choices about who gets what in America's economy. When corporations use profits for buybacks instead of worker development, they're explicitly deciding that executive enrichment matters more than broad-based prosperity.
Workers fight back as policies gain traction
The systematic nature of these transfers has finally sparked political attention. United Auto Workers president Shawn Fain captured the dynamic perfectly: "Corporate greed turns blue-collar blood, sweat, and tears into Wall Street stock buybacks and CEO jackpots."
Congress responded in 2023 with a 1% excise tax on stock buybacks, raising $2.1 billion from the Low-Wage 100 companies. While modest, this tax demonstrates how policy can redirect corporate behaviour. More ambitious proposals are advancing: the Stock Buyback Accountability Act would quadruple the tax rate, potentially generating an additional $6.3 billion annually—enough to fund over 327,000 public housing units each year.
Public opinion research reveals overwhelming support for such measures. Eighty percent of voters favour tax increases on corporations paying CEOs more than 50 times their median worker's salary. This consensus spans party lines, reflecting growing awareness that extreme compensation disparities threaten economic stability and social cohesion.
Local governments aren't waiting for federal action. San Francisco and Portland have implemented taxes on companies with wide CEO-worker pay gaps, generating revenue whilst creating incentives for more equitable compensation. These initiatives provide working models for broader reform.
The reckoning arrives
The contradiction between corporate rhetoric and reality has become impossible to ignore. When Starbucks claims it values workers whilst awarding one executive nearly $100 million in four months, the company exposes the hollow nature of stakeholder capitalism rhetoric. When Lowe's eliminates jobs without severance whilst spending billions on buybacks, it reveals whose interests actually matter in corporate decision-making.
Worker organising campaigns have made these trade-offs visible and politically potent. Starbucks employees seeking union recognition face a company that spent their collective annual wages on one executive's signing bonus. The contrast destroys traditional justifications for extreme executive pay based on performance or talent scarcity.
The evidence from four decades of deregulated buybacks is clear: this system systematically transfers wealth from workers to executives whilst undermining productive investment. What began with Reagan-era deregulation has created a corporate machine optimised for executive enrichment rather than broad-based prosperity.
But the same policy decisions that created this system can be reversed. CEO pay ratios remained around 40-to-1 for decades until the 1980s regulatory changes. Many companies, including Lowe's, conducted zero buybacks as recently as the early 2000s. Current practices reflect policy choices, not economic inevitabilities.
The question now is whether American democracy can muster the political will to restore balance. Worker organising campaigns have exposed the human cost of corporate priorities. Public opinion supports reform. Policy tools exist to redirect corporate resources toward productive investment and worker compensation.
What remains is implementation—the unglamorous work of changing rules and incentives to serve working Americans rather than wealthy executives. The alternative is a continued transfer of wealth upward whilst working families struggle with stagnant wages and economic insecurity, undermining the shared prosperity that democracy requires to survive.